Matt Potter 12:02 p.m., May 24
City to Implement "Pay First, Litigate Later" on Disputed Tax Assessments?
City Attorney Jan Goldsmith wants to "place the City in a more defensible posture" against those looking for refunds on tax assessments.
Goldsmith plans to do so by adding a new section [Section 22.1708] to the City's code which sets strict guidelines for residents who wish to challenge the amount or legality of a City tax, assessment, or penalty. The new section will prohibit residents to file lawsuits against the City without having paid the disputed assessment first and before going through the proper administrative channels. Lastly, a group of claimants would not be allowed to file a class action tax claim against the City.
"A claimant must: exhaust administrative remedies; present a properly executed claim for a tax refund to the City; and wait for the claim to be rejected before suing the City," reads a staff report from the City Attorney's Office.
Some recent examples of disputed local assessments have occurred in Golden Hill and South Park where residents paid millions of dollars to an illegally-formed maintenance assessment district before a judge struck the district down in court, or, in downtown, where, thousands of residents overpaid on their property and business improvement district assessments due to a a flawed engineer's report. No refunds have been issued in either case.
City councilmembers will consider adding the new section to the Municipal Code at a hearing on Tuesday.
Update: Gina Coburn, Communications Director for the City Attorney's Office, responded to the "pay first, litigate later" policy by adding that the policy is in response to a recent court decision and many cities and counties across the state are adopting similar ordinances.
"The "pay first, litigate later" requirement is contained in the California Constitution. It has been the rule for many decades as to claims against local governments and the State of California," wrote Coburn in an email.
"However, a recent appellate court decision stated that it now applies only to those local governments that have an ordinance requiring it. It still applies to claims against the State of California.
As a result of this appellate decision, cities across the state have adopted ordinances similar to the one we proposed.
As attorneys for the City of San Diego, it would be malpractice for our office to neglect bringing this to the City Council. As the City's policymakers, they can accept or reject the proposal.
We understand the view that this requirement is against the interests of taxpayers who want to file lawsuits. We emphasize that, regardless of what San Diego does, the requirement continues to apply to claims against the State of California and it remains a part of the California Constitution."